Author: Token Dispatch, Prathik Desai, compiled by Block unicorn

U.S. President Donald Trump signed a resolution last Thursday to repeal the IRS's controversial decentralized finance (DeFi) broker rules for his first cryptocurrency victory. This is also the first crypto-related bill signed by the president in the United States. After years of regulatory uncertainty, the crypto industry has finally found solid evidence that Washington is listening.

The resolution passed with impressive cross-party support, with the Senate voted 70 to 28 and the House of Representatives voted 292 to 132, indicating that cryptocurrencies may finally surpass the differences.

This reversal is not just abolishing a problematic tax rule; it may be a prelude to how decentralized financial ecosystems evolve in the world's largest economies.

In this article, we will take you through the origins of the DeFi broker rules, the importance of their abolition, and, more importantly, how it will lay the foundation for a new way of crypto regulation under Trump 2.0.

On December 27, 2024, Biden finalized a controversial IRS rule in the last few weeks requiring "DeFi brokers" to collect and report user transaction information - the last suppression of crypto innovation before the change of leadership.

This rule extends the definition of “broker” in the Infrastructure Act of 2021, brings DeFi platforms into it, requiring them to issue Form 1099 to users and report transaction details to the IRS, which was originally scheduled to come into effect on January 1, 2027.

This shocked industry experts and prompted them to fight back.

Why? Seven words: Technically unacceptable.

Biden specifically targets "front-end service providers". Think of MetaMask or Uniswap websites, where millions of users exchange tokens—these intuitive interfaces allow average users to access decentralized protocols.

Under this rule, these front-ends need to collect names, addresses, phone numbers and transaction details—and in a truly decentralized ecosystem, they simply cannot get this information.

When facing this contradiction, the IRS responded with a perfunctory statement:

"People with technical expertise and engaged in trade or business related to financial services should abide by the same rules as those of other people operating financial services."

This reveals one thing - a profound misunderstanding of how decentralized systems operate. Industry leaders describe it as an “irreconciliational contradiction”—requiring entities to collect information that they simply cannot access.

The Biden Treasury Department extended the rules to DeFi at the last minute, which was seen as an executive overreach without Congress.

David Sacks, Trump's head of AI and crypto, called it "the midnight regulation" without hesitation, saying it "will kill U.S. innovation, raise privacy concerns, and impose an unprecedented compliance burden on U.S. DeFi companies."

The importance of repealing the rule itself is far more than a minor revision of taxes.

Under the Congressional Review Act, which Congressional Review Act used by Congress to repeal the rule, the IRS shall not issue "substantively similar" regulations without the authorization of the new Congress. This is not just a pause of the rules, but a breathing space for developers and entrepreneurs who can now develop with more confidence.

The adoption of the resolution shows that the goal pursued by the crypto industry over the years has finally been achieved: it has acquired significant capital in Washington.

Want to hear more good news? This may just be the beginning. Treasury Secretary Scott Bessent said at the recent White House Digital Assets Summit that plans to “revoke and modify” relevant crypto tax rules.

The most important feature of this reversal is its cross-party winning nature.

When Republicans and dozens of Democrats vote together to overturn Democratic rules, this reveals a shift in the importance of cryptocurrencies and the fact that financial technology innovation deserves room for growth.

This marked a major shift in the Securities and Exchange Commission era under Gary Gensler, when Democratic leadership largely supported radical enforcement actions against crypto companies. Even Senate Minority Leader Chuck Schumer broke the party leadership position in support of the measure, a consideration that fully demonstrates the growing importance of cryptocurrencies in elections.

The industry groups that once struggled to gain recognition have now become influential voices.

The Blockchain Association and the DeFi Education Fund led active lobbying, successfully reversed the Democratic voting situation and eventually won a majority that could overturn the veto. Their success shows that cryptocurrency advocacy has matured rapidly, and its outreach efforts to key legislators are very mature, focusing on specific issues rather than general blockchain education.

When Biden introduced the rule, the Blockchain Association promised to take "stimulating action." They did deliver on their promises.

ProsecutionFour months after the lawsuit, the association is now celebrating the abolition of the rules that threaten to end the U.S. crypto industry.

It is important that the victory is achieved despite some influential Democrats’ opposition that the resolution may fuel tax evasion.

Rep. Richard Neal, Democrat of Massachusetts, had warned that the move could result in a loss of $4 billion in tax revenue. The revenue is estimated to come from unreported capital gains, which will remain the focus of controversy as crypto advocates push for further regulatory easing.

The signing of this resolution has greatly changed the United States' position in the global competition for crypto dominance.

The contrast is sharp. Just a few months ago, crypto companies were abandoning the U.S. market due to regulatory uncertainty.

Coinbase had prepared a contingency plan to move overseas. Now, Trump’s campaign promise to position the United States as the “crypto-capital of the world” appears to be taking effect.

As global investment in DeFi surges – currently about $90 billion is locked in the agreement, according to DefiLlama, creating a friendly regulatory environment will gain enormous economic benefits: high-skilled jobs, tax revenue from legal operations, and technical leadership.

The resolution also sends a strong signal to regions such as Hong Kong, the UAE and Japan that are positioned as crypto-friendly alternatives.

For crypto entrepreneurs and investors around the world, Thursday’s signing conveyed a clear message: the United States is open to business.

This resolution raises reasonable questions about the balance between innovation and tax compliance.

Critics, such as Rep. Lloyd Doggett, Democrat of Texas, argue that repealing the rule would create exploitable loopholes for wealthy investors.

This concern is not completely unfounded.

The decentralized nature of the DeFi protocol means that transactions are conducted without records from traditional intermediaries. While the blockchain itself is transparent, it is still challenging to associate a wallet address with a taxpayer. Without some kind of reporting mechanism, tax compliance depends largely on voluntary disclosure.

Some experts have proposed a compromise - creating an optional compliance framework to exchange for regulatory clarity with certain disclosures. This "safe harbor" approach will allow the DeFi protocol to operate legally, while gradually introducing appropriate safeguards.

Trump's signing of this resolution is a breakthrough in resolving the core contradictions of crypto-regulation that has plagued the industry since day one: the collision between the regulatory framework and the digital native financial system in the industrial era.

This victory shows that Washington finally admits to forcing decentralized systemsAdapting to a centralized regulatory framework is not feasible. Innovation requires proper guardrails, not barriers to modification.

This moment reveals a deeper content of American regulatory philosophy. For decades, U.S. financial regulation has followed a model: innovation occurs, problems emerge, and regulatory responses. DeFi broker rules attempt to pre-regulate before understanding the natural evolution of technology. Its failure shows that the United States is returning to its traditional strengths—allowing innovation to flourish while addressing specific problems as they arise.

Celebration should be pragmatic. The crypto industry faces a critical credibility test. After gaining room for regulatory breathing, it must now offer tangible benefits beyond traders' profits. Can DeFi significantly improve financial availability? Will it reduce daily transaction costs? Can it create more efficient markets and benefit the wider economy?

The cross-party nature of this victory is both an opportunity and a warning. While encryption has surpassed partisan boundaries today, its support still depends on the practicality of presenting the real world. If the industry cannot transcend speculation and solve practical problems, today's allies may become tomorrow's critics.

This reversal is a wake-up call for global competitors who believe the United States has abandoned its leadership in digital asset innovation. The United States has unparalleled capital markets, technical talent and regulatory flexibility – when these factors work together, they will create a strong competitive advantage.

The road ahead is still full of challenges. The Securities and Exchange Commission’s regulation of tokens, the Commodity Futures Trading Commission’s jurisdiction over derivatives, and the bank’s concerns about stablecoins — these issues remain unresolved. But the resolution shows that, when broad ideological arguments often fail to work, a well-organized advocacy campaign focused on specific technical issues can succeed.

The window of innovation has been opened. Now, the industry needs to work with regulators to create a framework that protects consumers and drives true innovation. Thursday's signing suggests that the two sides may be ready for such a conversation for the first time.